OECD-FAO Agricultural Outlook 2015 to 2024 Focus on Latin America
Stephan Hubertus Gay OECD Trade and Agriculture Directorate México, 29 October 2015
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Long term real price trend
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200
400
600
800
1 000
1 200USD/t
Real Maize Price Long Term Trend
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Prices to remain higher than the years preceding the 2007-08 price spike
40
50
60
70
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100
110
120
Index (2012-14=100)
Cereals Dairy Meat Oilseeds
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This Outlook integrates uncertainty analysis
10th
90th
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USD/t Nominal maize price
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• Production increase based on yield growth and area
expansion
• The Americas main surplus region
• Special chapter on Brazil • Context: agriculture’s evolving role in the economy
• Main highlights of the Outlook for Brazil
• Three core challenges: 1. Sustaining agricultural productivity growth
2. Improving the environmental sustainability of
agriculture
3. Achieving further reductions in poverty and inequality
Focus on Latin America
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Arable crop areas and yield changes in Latin America
Average annual percentage change 20024 relative to 2012-14
Notes: Axis refer to average annual percentage changes in yield and area harvested over the projection period (2015-24), while the size of the bubbles are indicative of the share in total arable crop area in the base period (2012-2014).
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Arable crop areas and yield changes in Asia and Pacific
Average annual percentage change 20024 relative to 2012-14
Notes: Axis refer to average annual percentage changes in yield and area harvested over the projection period (2015-24), while the size of the bubbles are indicative of the share in total arable crop area in the base period (2012-2014).
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World exports concentrated
AFRICA AMERICAS ASIA EUROPE OCEANIA
Concentration of exports, 2024
• Strong regional
differences persist
• US, EU and Brazil
remain among top
exporters
• In addition to sugar,
Brazil will become
leading exporter of beef
and poultry.
• Increased market risks,
associated with natural
disasters or the
adoption of disruptive
trade measures.
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World imports dispersed
Concentration of imports, 2024
• China stands out as
main importer of many
commodities.
• Trade pattern between
developing and
developed countries will
persist.
• Trade and domestic
policies are expected to
influence
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Producer support (percentage of gross revenues)
0
5
10
15
20
25
30
35
2000-02 2012-14 2000-02 2012-14 2000-02 2012-14 2000-02 2012-14 2000-02 2012-14 2000-02 2012-14 2000-02 2012-14
OECD Chile European Union Mexico United States Brazil China
%
Market Price Support Payments based on output and variable input use Other payments to farmers
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• Share of primary agriculture in GDP not especially high: 5.4%
in 2013
• Broader supply chain from inputs to processing & retail: 18%
• Agriculture and agro-food account for more than 1/3 of total
exports => major foreign currency earner
• The sector has played a “buffer” role during periods of weak
economic growth
• The sector supplies almost half the country’s energy
requirements
• It accounts for 13% of employment
• Poverty in Brazil is predominantly urban, but the incidence is
higher in rural areas where farming is a central activity
Agriculture plays an important role in the functioning of the Brazilian economy
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• Agricultural output has more than doubled since 1990
• The main driver has been rapid productivity growth, with some increase in agricultural area
• Technological change
• Capital replacing labour
• Change in the destination of exports: Asian market has become more important than the European one
• Slowing rate of deforestation – debate on agriculture’s direct and indirect contribution
• Agriculture a significant source of GHG emissions, but total emissions falling
• Rapid reductions in poverty and hunger, with improved access to food
Rapid development of the agricultural sector
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• Brazil to become foremost supplier in meeting additional global import demand
• But for many products a large share of production goes to the domestic market
• Production growth to come mostly from productivity improvements, with little increase in agricultural area
• Further reforms could enhance productivity – e.g. investment in infrastructure, reduced regulatory burden
• Forest Code, Low Carbon Agriculture will improve sustainability of farming practices
• Opportunities for family farmers in key products, e.g. coffee, tropical fruits
Highlights for Brazil
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Allocation of ten year production increases of major exportable commodities in Brazil
0
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20
30
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50
60
70
Ethanol Cotton Oilseeds Sugar Pork Poultry Beef Coarsegrains
% Change
International Market Domestic Market
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Impacts of 25% higher (or lower) economic growth in China
-4
-3
-2
-1
0
1
2
3
4
Oilseeds Sugar Vegetable oils Poultry Cotton
Mt
China Imports Brazil Exports to China Brazil Exports Brazil Production
ch
an
ges b
y 2
024
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Crop production in Brazil
0
50000
100000
150000
200000
250000
300000Mt Oilseeds Coarse grains Sugar Cotton Wheat
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More sugarcane allocated to produce ethanol
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2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024
billion litres Mt Ethanol Sugar Biofuel
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• Reducing the costs of doing business: • Lower regulatory burden, lower industrial tariffs,
simplified indirect taxes
• Improving the capacity for development: • Investment in infrastructure; strengthening human
capital
• Strengthening the innovation system
• Alignment of policy incentives
Challenge 1: Sustaining productivity growth
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• Brazil has abundant natural resources
• Environmental constraints vary across the country
• Production increases can be achieved sustainably
• Current policies emphasise these opportunities
• New Forest Code; Low Carbon Agriculture
• Agriculture a significant source of GHG emissions –
impact of a prospective climate change agreement still
unclear
Challenge 2: Improving the environmental sustainability of agriculture
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• Within agriculture, there are commercial opportunities for
poorer farmers in some sectors (e.g. coffee, tropical
fruits)
• Targeted investments can help farmers realise those
opportunities
• Parallel need for balanced rural development that
creates jobs both within and outside agriculture
Challenge 3: Achieving further reductions in poverty and inequality
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www.agri-outlook.org
For inquiries or further information, please contact:
Gregoire Tallard
Trade and Agriculture Directorate
(OECD)
Holger Matthey
Trade and Markets Division
(FAO)